Access to mortgages for first-time buyers is getting easier with the number of products available doubling in number in the last three years, according to a study.
Moneysupermarket, an online comparison website, says that since 2012 the number of 95% mortgages has rocketed by nearly 450%.
In addition, first-time buyers are also being tempted by mortgage rates that have dropped by 1% though the website is urging potential homebuyers to be aware of the mortgage’s whole cost.
The study has also found that there are now 2,776 mortgages for first-time buyers, with the total being boosted by the Help to Buy scheme which helps buyers onto the property ladder.
The average rate for a first time buyer mortgage is now 3.26%.
Rates for first time buyer mortgages
The average loan to value needed for a first time buyer mortgage has remained fairly steady at 79% over the past three years.
This means that the average first time buyer in the UK is now having to find a £31,500 deposit on a property valued at £150,000.
Under the Help to Buy scheme, a property of the same value would only need a 5% deposit of £7,500.
Moneysupermarket says that there are now 170 mortgages available for those with a 5% deposit with an average rate of 4.72%.
The website’s head of banking, Kevin Mountford, said: “The growing number of mortgages for first time buyers, and falling interest rates, is good news for those wanting to get onto the property ladder.
“For those who can scrape a 10% or 15% deposit there are more competitive deals available.”
However, he warned that anyone looking to take on a first time buyer mortgage should be aware of the additional fees which may affect the benefit of having a lower mortgage rate.
Small firms say alternative finance demand will rise
Meanwhile, around 60% of the UK’s SME’s say that the demand for alternative finance will grow as banks still have tight lending criteria in place.
The study from Amicus Finance says there’s been a drop in the level of traditional business finance from mainstream lenders and alternative finance, such as bridging loans, will increase by 26% over the next two years.
Last year, the firm says that alternative lending amounted to £1.74 billion, which is double the amount loaned in 2013.
Of the alternative finance options for business, 24% said they had looked at crowd sourcing finance, which also includes peer-to-peer lending, while 18% considered invoice/cashflow finance.
Businesses looking to bridging loans for their finance needs
When it came to commercial mortgages and bridging loans, 8% of businesses said they had considered this option while 6% had looked at asset finance.
The chief executive of Amicus, John Jenkins, said: “The finance landscape for business has changed for good and alternative finance demand is going from strength-to-strength.
“Small businesses are turning to specialist lenders because they have the skills to appreciate their specific needs.”